The Effects of Health Care Reform

Does Universal Coverage Improve Health? The Massachusetts Experience
Charles J. Courtemanche and Daniela Zapata

NBER Working Paper No. 17893
March 2012

JEL No. I12,I13,I18

ABSTRACT

In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national health care reform. Using individual-level data from the Behavioral Risk Factor Surveillance System, we provide evidence that health care reform in Massachusetts led to better overall self-assessed health. An assortment of robustness checks and placebo tests support a causal interpretation of the results. We also document improvements in several determinants of overall health, including physical health, mental health, functional limitations, joint disorders, body mass index, and moderate physical activity. The health effects were strongest among women, minorities, near-elderly adults, and those with incomes low enough to qualify for the law’s subsidies. Finally, we use the reform to instrument for health insurance and estimate a sizeable impact of coverage on health. The effects on coverage were strongest for men, non-black minorities, young adults, and those who qualified for the subsidies, while the effects of coverage were strongest for women, blacks, the near-elderly, and middle-to-upper income individuals.

http://www.nber.org/papers/w17893.pdf

Assorted Links

1. A useful documentary ("The Flaw") on the economic crisis aired last night. Featuring the likes of Robert Shiller, Robert Frank, Joseph Stiglitz and Dan Ariely. See http://theflawmovie.com/.

2. In reference to the above, the Slingbox is a very useful invention for anyone traveling frequently or living abroad who wants to be able to watch tv in their home country.

3. Interesting paper combining the important areas of price elasticity of demand with respect to health expenditure and myopia.

Moral hazard in health insurance: How important is forward looking behavior?
Aviva Aron-Dine, Liran Einav, Amy Finkelstein, and Mark Culleny

Abstract

We investigate whether individuals exhibit forward looking behavior in their response to the non-linear pricing common in health insurance contracts. Our primary empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial (spot) price of medical care but a higher expected end-of-year (future) price relative to employees who join the same plan earlier in the year. Our results reject the null of completely myopic behavior; medical utilization appears to respond to the future price, with a statistically signi…ficant elasticity of (initial) medical utilization with respect to the future price of -0.2 to -0.6. To try to assess the extent of forward looking behavior, we develop a stylized dynamic model of individual behavior and calibrate it using data from the RAND Health Insurance Experiment. Our calibration exercise suggests that the elasticity we estimated is substantially smaller than the one implied by fully forward-looking behavior, yet it is sufficiently high to have an economically signi…ficant effect on the response of annual medical utilization to a non-linear health insurance contract. Overall, our results point to the empirical importance of accounting for dynamic incentives in analyses of the impact of health insurance on medical utilization.

4. Paper on the consumption value of higher education.

The Consumption Value of Postsecondary Education
Brian Jacob, Brian McCall, Kevin Stange,

http://isites.harvard.edu/fs/docs/icb.topic964076.files/College%20Consumption%20Nov%202%202011.pdf

Abstract
Education provides both investment and consumption benefits; the former being realized after schooling is completed but the latter accruing only while schooling is actually taking place. In this paper, we quantify the importance of consumption value considerations to schooling decisions in the context of higher education and examine the implications for colleges’ strategies for attracting students. To do so, we estimate a discrete choice model of college demand using micro data from the high school classes of 1992 and 2004, matched to extensive information on all four-year colleges in the U.S. We find that most students do appear to value college attributes which we categorize as “consumption,” including college spending on student activities, sports, and dormitories. In fact, students appear to be more willing to pay for these non-academic aspects of colleges than typical academic aspects, such as spending on instruction. Estimates suggest that this taste for consumption amenities is broad-based among many student groups, whereas taste for academic quality is confined only to the high achieving. Consequently, policies that reallocate financial resources away from these non-academic aspects to instruction would not enable most schools to attract more or better students, as some policy-makers suggest. However, since student preferences for college attributes are very heterogeneous different colleges face very different incentives for changing their characteristics depending on their current student body and those they are trying to attract.

Our empirical approach makes a number of improvements on existing literature, including accounting for unobserved choice set variability created by selective admissions, controlling for fixed unobserved differences between schools and price discounting, and permitting greater preference heterogeneity.